We recently compiled a list of the Jim Cramer’s Hottest 10 Stock Picks. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against Jim Cramer’s other stock picks.
In a recent episode of Mad Money, Jim Cramer talked about what he sees as Wall Street’s biggest oversights this earnings season, especially on a day when the Dow dropped 141 points, and the NASDAQ advanced 0.2%. Cramer highlighted the misleading narratives surrounding the impact of GLP-1 drugs on food and beverage companies, the reluctance to lower prices post-pandemic, the skepticism around AI investments, and the persistent belief that Intel remains dominant in the tech sector.
Cramer argues that if companies were more honest about their changing situations, they would gain credibility and potentially boost their stock prices. Instead, by withholding important details, they leave investors confused and more likely to make poor decisions.
“If companies just own up to their own changing circumstances, things would be so much easier for everybody. But who wants to admit mistakes? They earn a lot of credibility for themselves leading the higher stock prices down the line, instead their stocks languish as investors try to assess what’s really going on and they presume the worst not the best.” said Cramer.
In a time filled with so much misinformation, Cramer emphasized how easy it is to be misled and underscored the need to recognize these gaps. According to Cramer, despite approximately 20 million Americans reportedly using GLP-1 weight loss and diabetes drugs, food and beverage companies refuse to acknowledge any negative impact of these medications. They won’t even suggest it. Cramer argues that their denial of the effects of GLP-1 drugs is simply untrue.
“We know that people eat much less when they take these GLP-1s and consume less snack food because it tamps down on cravings. …These drugs are incredibly powerful. The idea they aren’t doing damage to the snack food companies is insane.”
Cramer commented on the rising prices, stating that most companies see no need to lower them, despite significant hikes during the pandemic. He pointed out that airlines, which have consistently underperformed, refuse to reduce fares, behaving as if the price hikes never happened.
“In the airlines, there are endless underperformers, they simply wouldn’t roll back prices, they act as if they didn’t even take them up in the first place.”
The same goes for hotels and entertainment venues, which sharply increased prices during the pandemic and now resist lowering them, even as demand forecasts decline. Cramer also noted that many restaurants either claim their price hikes haven’t hurt sales or refuse to acknowledge the need to roll back prices.
“They raised prices drastically during the pandemic. They won’t cap the raising prices too much even as the forecast is coming down hard.”
Discussing AI, Cramer strongly disagrees with Wall Street’s claim that AI investments are a waste of money. He points out that many believe big companies spending heavily on AI-related video chips aren’t seeing any significant returns, and are only investing to keep up with competitors (see 33 Most Important AI Companies You Should Pay Attention To).
“We’re constantly being told that none of the big companies spending a fortune in video chips for AI has seen any meaningful return on that investment. They’re only doing it to prevent their competitors from getting an edge. That’s what we keep on hearing. That’s absurd!”
Cramer also challenged the common belief that INTC remains a leader in its sector. He dismissed claims that the company is poised for a major comeback, particularly in data centers, and that it has a chip capable of rivaling its competitors’ dominance. He pointed out that the company’s financial health tells a different story, citing the company’s decision to cut its dividend last year and suspend the remainder this year. According to Cramer, these actions don’t signal dominance, and he warned that this is not the same semiconductor company it once was, despite what the company might claim.
“I keep hearing that Intel’s gonna make a huge comeback that is catching up the others in the data center. That the data center has an Nvidia killer in GE-3. That it’s using the chips to sack money from you and further it’s dominance. Dream on! Have you seen Intel’s balance sheet? Can you read one? Do you think a company that cut its dividend last year and then suspends what was left of it this year in order to assert its dominance?! Look, this is not the Intel of old even though we want it to be. Despite Intel’s protestations, I wouldn’t want to be Intel’s partner.”
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Investors: 302
Amazon.com, Inc. (NASDAQ:AMZN)’s cloud computing division, Amazon Web Services (AWS), is experiencing significant growth, with a 19% year-over-year revenue increase and a 75% jump in operating income last quarter. This success is largely fueled by the strong demand for AI services and the ongoing transition of corporate IT infrastructure to the cloud. Additionally, Amazon.com, Inc. (NASDAQ:AMZN)’s entry into the healthcare market, particularly through Amazon Pharmacy, is showing promising results, with growing consumer adoption and increasing market share.
Despite a recent dip in Amazon.com, Inc. (NASDAQ:AMZN)’s stock price, Wall Street analysts remain optimistic, consistently rating the stock as a “buy” and projecting substantial upside. Recent business developments, including securing NBA media rights and a successful Prime Day event, further support Amazon.com, Inc. (NASDAQ:AMZN)’s strong growth outlook.
Jim Cramer explained that investors are hesitant to buy Amazon.com, Inc. (NASDAQ:AMZN) because they are concerned about the potential threat from Meta. They fear that Meta Platforms, Inc. (NASDAQ:META) might catch up to and even surpass Amazon.com, Inc. (NASDAQ:AMZN). This concern is well-founded, as Meta Platforms, Inc. (NASDAQ:META)’s advancements could pose a significant challenge to Amazon.com, Inc. (NASDAQ:AMZN)’s market position.
Diamond Hill Select Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Among our top individual contributors in Q2 were Amazon.com, Inc. (NASDAQ:AMZN), Texas Instruments and Mr. Cooper Group. Internet retail and cloud infrastructure company Amazon is benefiting from strong profitability, particularly in its Amazon Web Services (AWS) business. Shares also received a boost amid growing optimism around the demand for AWS as Amazon customers’ investments in generative AI projects continue growing.”
Overall AMZN ranks 1st on our list of Jim Cramer’s stock picks. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
